News International and Corporate Governance

Just a warning – this is going to be one of the duller, less sensational articles on this topic. But try and stick with me – the tax evasion charges that sent Capone down were technical.

Coming from a background in the banking sector (which is still reviled on a regular basis by “professional” journalists) one thing that has amazed me is that News International executives could claim that they had no knowledge of the activities of their underlings.

The reason why this seems so wrong is that News Corporation is a public company, quoted on the NASDAQ stock exchange. As such, investors would be entitled to expect the organisation’s management to have implemented systems of control.

However, such systems appear to have been totally lacking, and for an industry that is leaning on the importance of press freedom as a way of holding governments to account, that’s unacceptable. As Bob Dylan said “To live outside the law, you must be honest”. The impression we’re building is that the various editors of the News of the World (and possibly other titles in the group) were concerned only with whether there would be a libel action. Which – like any other court case – would be bought off out-of-court. You may recall the statement from James Murdoch:

“The Company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so. “

Me ? I’d be asking about whether he discharged his duty as an officer of the organisation. Corrupt or incompetent ?

National Treasure ?

I’ll just digress for a minute …

The last issue of the News of the World has been met with much nostalgia (much of it self-generated), glossing over the seedier “achievements” of this rag. I never bought a copy, and I don’t buy this.

And yes, it’s unfortunate that 240 journos have lost their jobs, many of whom may not have been implicated. But mine was one of 40,000 jobs (either gone already, or on the way) to have been lost from the organisation I worked for. Most of whom also worked hard, and weren’t to blame for the mistakes of corporate strategy.

And let’s get it clear. NotW didn’t die because of the Guardian or the BBC. It didn’t die because of MumsNet. It didn’t even die to protect Rebekah. It died because Murdoch wants to secure BSkyB. Those may have been the messengers, but the message was that the title was toxic – ordinary people were repelled by the actions of the organisation. Paul Mason’s article explains that very effectively.

Anyway, this sort of thing happens in the free market. It doesn’t come with a fairness option. Get used to it.

And let’s not kid ourselves that even under the current editor, all of these guys were soft and fluffy – read this story in the Shropshire Star.

Now, back to the main topic …

Corrupting and Corrosive

As I write, Ed Miliband has been running a press conference, in which he talks of the “systemic” and “cultural” failings of the organisation. This analysis resonates with my own feelings.

The influence of the Murdoch titles over the last 40 years has had a corrupting and corrosive impact on public life over the last 40 years. And the problem is that those who’ve grown up with that dynamic as the status quo can’t see a different world – one where a politician doesn’t need to fear that retribution for upsetting Murdoch or his underlings will be visited by humiliation.

And the culture of bullying and abuse of power wasn’t limited to “big boy” politicians, however. It was there in the workplace as well – as the massively Twittered “Harry Potter” incident evidenced.

Through all of this, there was no sign that they had the capacity to look in the mirror. These self-appointed and (to all intents and purposes) unregulated “guardians of freedom” would rail against an unelected judiciary (who were – as a result – less subject to bullying) without a hint of irony.

I’m sure that one thing that’s upset people is that there’s been virtually no sign of remorse or contrition from the organisation or its executives. No sign that they understand how ordinary people see this arrogance as compounding the crimes.

The historic use of threats and bullying (and some are – reportedly – still being made), of spin and misinformation, of admitting to the bare minimum, only after it has already been revealed – all of these suggest that they just don’t get it. They don’t understand why people are upset. They still think it’s just about damage limitation and message management – because that’s all they understand.

Regulation

The politicians keep backing off from this, but if Her Majesty’s Press wants to claim exemption from government interference as “The Fourth Estate” – with a duty of calling the government to account – then it has to be able to show that it exercises that duty responsibly.

However, it’s shown time and again that it won’t do that, and the PCC is still wheeling out excuses. Miliband’s assessment of them as a “toothless poodle” isn’t going to surprise too many…

There needs to be statutory regulation, with real powers. That framework should be “endowed” by – and answerable to – Parliament, as opposed to being under the control of government. OfCom seems to represent a suitable model, but the journos seem to keep trying to push our attention elsewhere …

Or maybe there’s a role for the Upper House here …

The American Impact

As I noted, NewsCorp is quoted on NASDAQ, and so is subject (together with all of its subsidiaries)  to US law. And one of the most interesting ones is the Foreign Corrupt Practices Act (“FCPA”) – which prohibits US organisations from bribing officials of foreign countries (from where they are, the UK is one of those). Interestingly, the UK has just caught up with the Bribery Act 2010 – although that won’t be retrospective.

The Telegraph has picked up that the impact of this could be enormous – potentially imposing a massive cost and effort on the whole of NewsCorp. If stories about 9/11 victims being hacked gains traction in the US, then the administration may reluctantly (heh) have to take a long, hard look at Fox News …

So when the NotW hacks paid off police and – as has just been announced – Royal Protection Officers, they just may have created a world of hurt for the parent company.

Fit and Proper ? BSkyB ?

Although he dominates the organisation, it’s NewsCorp that’s bidding for BSkyB, not Rupert Murdoch. So even Rupie himself (in theory) doesn’t necessarily come into the equation.

But the way that the corporation behaves, it’s culture and (on the most generous interpretation) the lack of control and management structures that you’d expect from a major corporation, should raise major doubts as to whether anyone can be convinced that their corporate structures and culture give us confidence in any assurances they may have made about (the key test of) plurality.

[Edit – adding conclusion]

Particularly as those assurances come from a company whose officers apparently:

• Lied to the PCC
• Misled Parliament
• (possibly) Lied under oath – in order to convict a man of perjury !

Phone Hacking …

Just took a couple of weeks off to sort out my College work. We’re heading into the Silly Season, so everything’s going quiet as the politicos head off to Tuscany, right? Then this started to take off.

I was surprised that I hadn’t written about this (directly) before – although I’ve touched on it in the Privacy pieces. Let’s try and summarise all of the issues … as they stand today….

At the time of writing, the News International aircon systems are really taking a hammering from all the stuff that’s hitting it. New twists are emerging on an almost hourly basis, and there’s an outburst of fear, loathing and ass-covering that rivals The Thick of It.

The Original Claims

It seems to have started in 2005, when Prince William figured out that his phone had been hacked. Complaints led to the Royal Correspondent – Clive Goodman – being jailed for 4 months. The investigation didn’t go much deeper, though, once the Royals were sorted.

However, a number of people in the public eye began to suspect that their phones had been hacked or tapped. John Prescott, Hugh Grant and Sienna Miller were amongst those convinced that they’d been compromised, but had difficulty getting the police to take any action.

Once the (second, separate) police enquiry did start to let the victims of the hacking know, they took legal action. But News International were effectively able to prevent many of the (civil, not criminal) cases from coming to court by buying them off. Even though many would have preferred the public forum of a court hearing, they would have ended up paying for the expensive News International lawyers had they proceeded.

Victims

So it seems it’s not just the Slebs with egos who’ve been hacked. Or politicians. Or their friends and relatives. It seems to be people who happen to be in the wrong place at the wrong time – like the families of the poor Soham girls, or of 7/7 victims.

Not only that, but the investigator involved was deleting messages from Milly Dowler’s mailbox when it was full, just so that he could get more material. An action which could give the family (and the police) hope that the abducted girl was still able to access her phone.

There’s a suggestion that even Sarah Payne’s family may have been hacked – if so, this would be the most cynical act of hypocrisy – Mrs. Brooks apparently sees the paper’s campaign which introduced “Sarah’s Law” as the major legacy of her tenure. That achievement couldn’t look more tarnished now.

“Managing the message”

Significantly, this seems to have taken place while Dave’s mate Rebekah Brooks was editor of the NotW. She writes:

“We will face up to the mistakes and wrongdoing of the past and we will do our utmost to see that justice is done and those culpable will be punished,”

The cynic in me would say that she’s had five years to do the facing-up and justice stuff. And all that appears to have happened is cover-up – limiting the damage to herself.

At the time of writing, news is breaking that NotW have undertaken a “document trawl” and that they’ve now identified the individual responsible for commissioning some of the hacking. Doesn’t seem like they were trying too hard the last time they scoured the records.

Bent Coppers ?

So after telling everyone that there was nothing else to come out, News International have now apparently “uncovered” emails suggesting that former Editor Andy Coulson approved payments to serving police officers providing information to the paper. Amazingly, Mrs. Brooks had owned up to this before a Commons committee – but Coulson (also present) managed to deflect the issue. more amazingly – the committee didn’t follow up on it.

No wonder – if these are true – that the Met could perhaps have pursued the original hacking claims with greater enthusiasm.

(Coulson was, of course, Dave’s Spin Doctor – and a cynic would note that the release of these emails could conveniently deflect attention from the current News Intl. hierarchy.)

Money Talks

Of course, what might really sink things is the money.

Not only is there a widespread revulsion at the NotW activities – which is likely to result in a massive circulation drop – but advertisers are reviewing the value of being associated with the rag. Ford have apparently pulled out, and even the bankers at the Halifax are considering having moral qualms…

If it affects the bottom line, then this is really going to get Murdoch upset…

But there’s an even bigger prize at stake – Murdoch want to get hold of the rest of BSkyB – giving him unfettered control of Britain’s biggest commercial broadcaster. After a widely reported screw-up by Vince Cable and the Telegraph, that’s looked safe in the hands of Jeremy Hunt, the Culture Secretary. Now public opinion could wreck those plans.

Out of the Woodwork…

Finally, some of the people who should have been sticking up for us are peeping over the parapet to see if it’s safe.

Ed Miliband is suggesting that Mrs. Brooks should “consider her position”. Tough words, Ed.

And then there’s the Press Complaints Commission – trying to convince us that they aren’t just a synonym for “Toothless“. Now – as documented in Roy Greenslade’s blog – they seem to have been trying to run a charm offensive to convince us that they really did control the newspapers (many of which don’t even subscribe to it).
Journalists – when interviewed – always dutifully trot out the line that “it’s really, really serious if the PCC get involved”. Maybe they should try working in the Financial Services sector if they want to understand what “regulation” means.

But they’ve finally rumbled the fundamental weakness obvious to everyone else.

Baroness Buscombe – the chair of the PCC – is now complaining (heh) that “There’s only so much we can do when people are lying to us.”. Andrew Neil’s video interview on The Daily Politics is well worth watching…

I guess we can expect that – once the criminal investigation is over – the NotW will be severely admonished for their conduct. That’ll teach ’em.

Let’s remind ourselves about a couple of statements in the PCC Editors’ Code of Conduct. Admittedly, some of these have been introduced since the alleged activities took place.

“In cases involving personal grief or shock, enquiries and approaches must be made with sympathy and discretion and publication handled sensitively.”

“Particular regard should be paid to the potentially vulnerable position of children who witness, or are victims of, crime”

“The press must not seek to obtain or publish material acquired by using hidden cameras or clandestine listening devices; or by intercepting private or mobile telephone calls, messages or emails; or by the unauthorised removal of documents or photographs; or by accessing digitally-held private information without consent.”

But, of course, they give themselves the big cop-out line – used to excuse everything – of …

“There is a public interest in freedom of expression itself.”

And, not surprisingly, the NUJ Code of Conduct uses the same unqualified excuse:

A journalist:

1. At all times upholds and defends the principle of media freedom, the right of freedom of expression and the right of the public to be informed

Now, I know there are journalists who do possess humanity. Maybe they need to have more say in how this section is interpreted.

We do deserve a free press. But by abusing this privilege, the NotW staff have done their profession a massive disservice.

And we really need a watchdog who doesn’t spend his whole time asleep in the kennel.

Hypocrisy

Most of the papers are carrying the story on the front page today. Sadly, the motives for doing so are (to my mind) cynical and suspect.

The exceptions are the News International stable, of course. The Times is running a non-story about judges being old and white. Not a shock to anyone, that. It does run the Coulson story in a side panel, which adds weight to the deflection theory.

The Sun’s front page doesn’t mention it at all.

So there’s no doubt about the genuine remorse the organisation is going through…

Sorting it all out …

Of course there needs to be an enquiry. That’s the minimum that needs to happen.

In 1990, (according to the PCC) the Calcutt Report recommended the establishment of the PCC for self-regulation. But, it said:

“If it fails, we recommend that a statutory system for handling complaints should be introduced.”

On the face of it, I can’t see that the PCC has much anything to justify its continued existence…

More privacy stuff …

Our PM says that he’s “uneasy” about judges granting privacy injunctions to protect powerful individuals.

Now, I’ve no sympathy with Slebs who sell their lives (and weddings … and their children’s births … and everything else) to the gossip mags, then want to cut out when it doesn’t suit their image.

But I do think those who are looking to do a job, and who haven’t courted the limelight for their public life, should be allowed their privacy.

I also hate hypocrisy, and wouldn’t be happy if abuse of our legal system meant that someone holding themselves as a role model could use it to (for example) protect a lucrative sponsorship deal.

But, really, maybe the courts are making law because Parliament has signally failed – and at the very time that the News of the World (for one) has been hacking into mobile phones. Apparently it would have been “inappropriate” with an election looming.

And because it looks as though our police forces may well also have turned a blind eye to this gross abuse of civil rights – as it might have “jeopardised their relationship with the press”.

FFS – How absolutely dim can you be ? The courts are apparently the only arm of governance which is giving any of us a slim chance of privacy. Sorry if it doesn’t suit your pals at News International though, Dave.